Russia Is Next In Line To Restrict Cash Transactions

The Russians are taking a page from the Europeans book (and not a positive one for libertarians). Given the substantial criminal activity and illegal entrepreneurship in Russia - the grey and black economies account for 50–65 percent of GDP and estimates that about $50 billion was taken out of Russia illegally in 2012 alone - the great and glorious leaders have decided to impose restrictions on cash transactions. As Russia Beyond The Headlines reports, Russia may ban cash payments for purchases of more than 300,000 rubles (around $10,000) starting in 2015 - starting with a higher ($19,500) restriction in 2014. They will also enforce mandatory cash-free salary payments (cash compensation accounts for 15% of GDP currently) in an effort to both bring some of the population's 'grey' income out of the shadow; and increase the volume of cash reserves in the banks. It would appear that wherever we look now, leadership are realizing that the limits of fiscal and monetary policy have been reached and now changing rules, limiting freedom, and outright confiscation are the only way to maintain a status quo. Ironic really, when the enforcement of said rules may just be the catalyst for the end of the status quo as the middle class suffers.

Russia may ban cash payments for purchases of more than 300,000 rubles (around $10,000) starting in 2015. The move is expected to boost banks’ cash reserves and put a damper on Russia’s shadow economy. However, the middle class will most likely end up having to pay the price for the scheme.

Moscow is looking to kill two birds with one stone: Firstly, it wants to bring some of the population’s “grey” income out of the shadow; secondly, it wants to increase the volume of cash reserves in the banks. The government’s bill will introduce the new rule to the State Duma. The document was prepared by the Ministry of Finance and approved by the government.

The restrictions on cash transactions will develop in two phases. In 2014, a ban on cash payments for purchases worth more than 600,000 rubles (about $19,500) will be introduced; the limit will then be halved to 300,000 rubles in 2015. Furthermore, the document introduces mandatory, cash-free, salary payments.

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Even now, cash withdrawals on payday account for around 85 percent of all ATM transactions. Moreover, in 2005–2011, cash flows more than quadrupled. According to Bank of Russia estimates, more than 90 percent of all commodity purchases in Russia are paid for in cash.

The government is now trying to bring the shadow economy into the light and increase money flows into the treasury, according to Investcafe analyst Yekaterina Kondrashova. In her words, as soon as the new rules come into effect, those using unofficial wage payment schemes will encounter certain difficulties, although there could be some ways to circumvent the law.

The Ministry of Internal Affairs and the National Anticorruption Committee estimate the market for money laundering and cash conversions at somewhere between 3.5 and 7 trillion rubles ($113–230 billion) — about 60 percent of the Russian federal budget.

Rosstat reports that the volume of the shadow economy (“grey” money from tax evasion, compensations paid as “cash in envelopes” and violations of currency and foreign trade regulations) is at least 15 percent of the GDP, according to Ricom-Trust senior analyst Vladislav Zhukovsky.

Given the substantial criminal activity and illegal entrepreneurship, the grey and black economies account for 50–65 percent of GDP. Even former Central Bank Chief Sergey Ignatyev had to admit that about $50 billion was taken out of Russia illegally in 2012 alone.

There is another side to the move toward plastic, however. Cash-free payments will result in higher prices for some goods and services. The middle class will suffer the most, because the “risk group” includes property and automobile transactions. The luxury segment will also be affected, including customized tours.

From the Federal Reserve Bank of St. Louis. It's a bit dated, 1999, but it offers a concise insight concerning capital controls. It's conclusions are as follows. I am certain this is one Fed paper that will soon be lost in the junk folder.

"In reality, capital controls rarely have been imposed in a well-thought-out way to correct clearly defined pre-existing distortions. Instead, capital controls most often have been used as a tool to postpone difficult decisions on monetary and fiscal policies.

The consensus of the research on capital controls has been that they can alter the composition of capital flows or drive a small, permanent wedge between domestic and offshore interest rates but they cannot indefinitely sustain inconsistent policies, and their effectiveness tends to erode over time as consumers and firms become better at evading the controls (Marston, 1995). Outflow restrictions, in particular, may buy breathing space, but that is all."

1. Currency controls are a risky, stopgap measure, but some gaps desperately need to be stopped.—Paul Krugman, “Free Advice:, A Letter to Malaysia’s Prime Minister,” Fortune, September 28, 1998.

2. “One of the architects of those articles, John Maynard Keynes, was a strong proponent of capital controls and the IMF often was seen as such during its early years.”

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some.... “The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose."

Everyone betrayed. No body wins. Now because of the decisions made all die. Sorry humans, the future is written in pencil until you figure it out. Don't bother with the holes inthe mountains either. Enjoy the methane you pricks...screw us, we screw you. Give us back our friends assholes. or you lose alot on monday again. Assholes keep friend in lock up...well, assad is dead as a bag of rocks. We wre betrayed. You are next.

"as all exist for solely for entertainment purposes now." how ironic that what needs to be banned is cash. Since it can't be done via inflation "we now will proceed the old fashioned way by banning cash transactions." wow...we all must be too rich. This increases the cash reserves in banks? So the money is more easily stolen?

Missed deficits? Pfff... as if that was news... Constitutional Tribunal is (finally) about to deliver it's ruling on the constitutionality of current national budget - if it's anything as the previous (2012), now that will be news...

as i mentioned the other day. look around in the US. How many retailers etc. don't accept $50 and $100 bills. this truly is a global economy now. these assholes are doing all this in sync. No coincidence.

OT for fun.
So I've recently been in Hawaii on vacation. And in my inimitable way, I notice serious shit others miss... Or ignore.. Whatever
A lot of Hawaiian words sound like multiple repeated syllables... Mookamookahubbahubliani kinda stuff.
And so this waitress asks us how our lunch is and I'm having a burger. I couldn't resist. "Now this is one good burger!" And my kids are going berserk trying not to laugh getting the Pulp Fiction line when Jules is tormenting whazziiz name asking him what Marcellus Wallace looks like. And my son sushess me when I'm ready to ask if its a Big Kahuna burger.
So any how, what with the repetitious vowel and syllable sounds I suggested that the movie line be dubbed for Hawaiian to be "Say say what what again motherfucker fucker"
My kids were crying laughing
Ah, all in a days correction of mans errors and proper perspectives

Oh man....
This is spooky. Right after that my son started talking about the exact same scene with the "bad motherfucker" billfold...
Next Ill probably be enveloped in a scalar dome shield for my own protection

Putin is a patriot. The only thing stopping him from making Russia into the greatest country on the planet are the "Russian" Mafia (hehe, not really) and Oligarchs. The lines blur quite a bit, and almost all are part of the pathologic victim-complex-driven tribe that seeks to (quite hypocritically) oppress everyone else. I hope more than a few joos come down with a nice case of the Polonium. No vaccine for that one, or so I hear.

There was 1 dollar bid ask spread in netdania website since the market close. So i am guessing something is messed up and the data is not reliable. and the volume seems to be tick volume based on changes to the bid or ask which are completely useless indicators with 1 dollar spread.

However in bullionvault.com, london prices are 28.43 - 28.55, the spread is not tight but reasonable. where some trades can happen.

i laughed my ass off when i saw that map - pure propaganda. if you notice, those are straight line distances, surely their planners know the great circle route would be a shorter distance and flight time???

NK typically likes to push buttons to get more attention, bring the US, ROK, etc. to the table for discussions on sanctions - this has a different feel to it with the seed of kim jong il at the helm. Could also all be part of the 'plan'...

Well usually, SKorea and the US bows down to their threats... but this time, no... so either NKorea will back down real soon... or shit will go down... and considering the SKorea/US retaliation plan... it has big chances of exploding into a full scale war.

Yep. Pentagon's best case scenario : 1 million dead. Several months of war. And that is without nukes, chemicals or biological weapons being used... and if NKorea isn't helped by China... And usually, war predictions are totally wrong... meaning it will be much worse than 1 million dead and more than months of war.

I think Apple have created a strategic alliance with the Norks and have been cunningly financing Kim (Jnr) dreams of glory. Finally Cuppertino can stop the Samsung Galaxy 4 before they can land the final blow and they become the new RIM.

Like Iran, any offensive action that NKorea takes will mean that the entire country will then be annihilated by the US. Its basically like committing suicide and they must know this, so either they are suicidal or they just dont give a damn.

The more governments try to contol every aspect of an economy, the more people try to avoid this control, barter is the new exchange as people lose faith in fiat. I have seen much more frequent deals of trade services than trade greenbacks in the last two years.

It is not the "Russians" per se, just their oligarchy acting to curb their freedoms. Nothing has changed the whole world over since the flags of Rome flew over most of the known world. Always remember; kick a collectivist whenever possible or be impoverished for the greater good. For the good of the oligarchy that is...

"...the volume of the shadow economy (“grey” money from tax evasion, compensations paid as “cash in envelopes” and violations of currency and foreign trade regulations) is at least 15 percent of the GDP..."

That's 15% more financial privacy and real capitalism than we have...!

Russia, what a fuckin' joke. What I mean is, I believe, and I don't think this thought is far-out anymore, that the entirety of the cold war was a big fat fucking sham - a hoax.

Furthermore, when "Phase II" or whatever is supposed to be enacted, that is, the permanent and utter downfall of the US, it needed to be shown that the USSR had moved toward the center. Hence the engineered collapse of the USSR, like building 7.

So it goes like this:

1) Phoney Cold War, for various purposes, take your pick - of course military industrial complex profits are a good place to start. Also a way to effectivly divide any possibility of Europe getting pipelines into the middle east.

2) The USA must be destroyed, so first off communism needs to be discredited. Hence the engineered collapse of the USSR. Whee! Look! It's all capitalist now!

3) By comparison, the communization of the USA can no longer be compared to the status quo in USSR. So now we have a police state that would make the Stasi envious. Amazing.

4) The war on terror, that is the stated purpose of the behind the police state in America, is also the current primary tool to lock the Spice in the middle east.

5) Europeans will be first to have their currency collapse. The US PetroDollar is then the hot stuff, so dollar assets will be bid like never before - so Uncle Sam can sell bonds ike there is no tomorrow. Of course the strong dollar will ignite the final USD hyperinflation.

The fuse is lit. The fractional non-reserve bomb is almost ready to blow. And it will blow, baby - it will BLOW.

Capital controls .... to discourage gold buying ? If gold is in your future .... this would be a good time .... to .... BTFD ! The new Pope is a weenie .... let's see him give all Falkland islanders sponge baths ?

But, but, but... Capital controls were supposed to come anywhere else before they come in Russia, following this site. Has Russia joined the EMU zone somehow between the time when they were sold as the new temple for 'american' beliefs and that piece of news?

Speaking of 'americanism', apparently, the Russians must deal with a severe crisis of 'americanism' on their turf

Lets see: shadow economy, ticked, flight of capital (if you cant beat them, join them, apparently, a lot of 'american' russians prefer to sell their country to buy themselves a future in more established 'american' areas), illegal entrepreneurial endeavours, ticked, looks like Russia has a much desired 'american' middle class surge.

Time for the political personal to take account of that massive change, because in 'american' societies, the 'american' middle class is the King class.

That other places had already capital control does not remove the fact that when predicting where capital control is coming next, Russia was not mentioned.

Non sequiturd.

What is the issue with selling cheap Chinese citizenism propaganda that might not be operational in a decades for the buyers? That is the buyers' issue?

By the way, the new Chinese Citizenism Communautist Party paradigm will be to run deficitis in good times (to fatten the soon to be extorted) and then run austerity programs in harsh times (to throw the dead pigs in the river).

Perhaps this is being done in anticipation of the end game re: competitive devaluation. If there is a sudden and ultimate race to the bottom then Russians are going to want to get their money out in a hurry. The Russian authorities may be shoring the economy up in expectation of the last great currency battle?

The bankers are vainly doing everything they can to make you keep money in their dead banks as the runs start. Remember that stuff about the number of the beast? Can't buy or sell without some digits? It looks like they want to make sure you cannot buy or sell without using your check card number.

When they announce paper cash is now worthless and you must use digital money, people will understand why they needed gold. That kind of control directed at only supporting banks will end the economy and society.

They won't try to confiscate gold and silver. You will just wake up one morning and find out it is illegal for a private citizen to buy or sell gold or silver, (except for jewelry which will have a mandated percentage of adulteration with other metals so as to lessen its appeal as an escape hatch).

Eventually there will be no rational reason not to resist in a violent manner.